Report 2012-118 Recommendation 2 Responses

Report 2012-118: California Public Utilities Commission: Despite Administrative Weaknesses, It Has Generally Awarded Compensation to Intervenors in Accordance With State Law (Release Date: July 2013)

Recommendation #2 To: Public Utilities Commission

The commission should determine the cause of its lack of compliance with state law requiring it to issue award decisions within 75 days of the date an intervenor submits a compensation claim, and it should determine what actions to take to rectify the problem. The commission should ensure that it has sufficient information, such as detailed tracking information regarding claims, to identify where in the process delays are occurring. If the commission determines that the current 75-day statutory period is unreasonable, it should seek a change in state law.

Annual Follow-Up Agency Response From November 2017

The Commission has instituted tracking and reporting systems for intervenor compensation matters that allow the intervenor compensation (IComp) unit to be aware of the status and timing of all intervenor compensation matters. We have determined that the crucial element in meeting the statutory timelines is personnel resources. When the IComp unit (which analyzes, checks, and makes recommendations on IComp requests) and the ALJ Division STAR unit (which produces and publishes IComp decisions) are at full strength, we can meet the timelines, absent unusual circumstances. If either IComp or STAR units are not fully staffed, there is a significant risk of falling behind. Currently, IComp unit is fully staffed but STAR unit is not.

Annual Follow-Up Agency Response From October 2016

Last year, the CPUC reported that it fully implemented this recommendation and in doing so, (1) had substantially reduced the backlog of pending claims and (2) was beginning to resolve claims within 75 days of filing. The CPUC noted that, because it handles claims on a "first-in-first-processed" basis, the backlog would have to be substantially reduced before the CPUC would be able to consistently resolve claims within 75 days. The CPUC has largely eliminated the backlog of pending claims and is now timely resolving most claims within 75 days of filing. State Audit Report 2012-118 found that, from 2008 through 2012, the CPUC awarded funds within 75 days for only 6% of the claims submitted during the five-year audit period. By comparison, from January 2016 through September 2016, 36 of 66 award decisions (54.5%) were decided within 75 days. Going forward, the CPUC expects to continue increasing the proportion of award decisions issued within statutory timeframes. For example, in September 2016, 8 of 10 decisions (80%) were 75 day compliant. There are currently 62 claims pending (22 of these were filed in August 2016) and most of these are expected to be timely resolved. However, some older claims are delayed indefinitely while the CPUC's Appellate Section or the Courts consider appeals of award decisions on challenged claims with similar fact patterns or while the CPUC implements Court-ordered changes on remand. The CPUC requests that the State Auditor find that the CPUC has fully implemented this recommendation.

Although the CPUC has made progress in issuing award decisions within 75 days of the date an intervenor submits a compensation claim, it has only resolved 55 percent of claims within 75-days thus far in 2016. While this constitutes an improvement from the 6 percent of claims awarded within the time frame in 2015, the CPUC has only just begun processing some claims in a timely manner.

In addition, a backlog of 34 claims still exists. Some of these claims are 22 months past the 75-day deadline. Although the CPUC points out that six of these claims are on hold due to appeals or while it implements a rehearing decision, the CPUC provided no justification for why the remaining 28 could not have been awarded within the time frame established by state law.

Annual Follow-Up Agency Response From October 2015

The Commission (CPUC) believes that it has fully implemented this recommendation. The CPUC has determined the cause of its lack of compliance with state law requiring it to resolve claims within 75 days of filing (See 60-day status report), and implemented actions to rectify the problem (See 60-day, 6-month and one-year reports). The CPUC has increased intervenor compensation staff support to more quickly reduce/eliminate the current backlog, and implemented detailed tracking of claims to identify processing delays. The CPUC handles claims on a "first-in-first-processed" basis and, as a result, the backlog must be substantially reduced before the CPUC will be able to consistently resolve claims within 75 days. However, the backlog has been substantially reduced, and the CPUC is beginning to resolve some claims within 75 days. During the one year period since our last report on October 6, 2014, the CPUC resolved 62% more claims than for the same period in 2013-2014 (162 vs. 115), and has reduced the number of pending claims by more than half (from 131 to 49). By maintaining the current level of staff support, the CPUC anticipates that it will be able to eliminate the backlog of claims within the next year and thereafter be able to consistently resolve most claims within 75 days. This progress demonstrates that our efforts to implement this recommendation have been successful. Therefore, the CPUC requests that the State Auditor find that the CPUC has fully implemented this recommendation.

Although the Commission has taken steps since our report was released to better understand where delays in the award decision process had occurred and has taken concrete steps to reduce its backlog of outstanding claims, it is still not consistently issuing decisions within 75 days, as required by state law. Information available on the Commission's website shows that the Commission has made progress in reducing the backlog of intervenor compensation claims awaiting decisions between March 2015 and September 2015. The backlog of intervenor compensation claims has fallen from 129 to 55 during that time. in September 2015, the Commission reported that 47 of the 55 claims had been awaiting award decisions past the 75-day period allowed by state law, and three had been awaiting decisions for over a year. The Commission acknowledges that it is beginning to resolve some claims within 75 days and that within the next year it will be able to eliminate the backlog and consistently resolve most claims within the deadline after that. We will continue to monitor the Commission's actions to ensure it begins complying with state law by issuing award decisions within 75 days of the date an intervenor submits a compensation claim.

Annual Follow-Up Agency Response From October 2014

The Commission (CPUC) believes that it has fully implemented this recommendation. The CPUC has determined the cause of its lack of compliance with state law requiring it to issue award decisions within 75 days of the date a compensation claim is submitted (See 60-day status report), and determined the actions to take to rectify the problem (See 60-day, 6-month and one-year reports). The CPUC has implemented detailed tracking of claims and can identify where in the process delays are occurring (See 6-month status report). Data shows that it currently takes about 40 hours to process a claim. Therefore, once the backlog of claims is cleared, most claims should be easily resolved within 75 days. The modified process implemented in July 2014 is further reducing the time for processing a claim. From July through September 2014, the CPUC prepared 27% more draft decisions (28 vs. 22) and resolved 14% more claims (25 vs. 22) than for the same period in 2013. The CPUC has increased staff support to more quickly reduce/eliminate the current backlog. The CPUC Legal Division analyzed the OIA proposal to delegate authority to the Executive Director and advised that such authority cannot be delegated without specific statutory authority. Because the CPUC will be able to resolve most claims within 75 days once the backlog of claims is cleared, the CPUC will not pursue legislation on this matter at this time. Therefore, the CPUC requests that the State Auditor find that the CPUC has fully implemented this recommendation.

Although the Commission has taken steps since our report was released to better understand where delays in the award decision process had occurred and increased staffing to assist in reviewing intervenor compensation claims, we found that a substantial backlog of claims still exists. In fact, information available on the Commission's website shows that the number of compensation claims awaiting decisions has remained relatively constant between September 2014 and March 2015. The backlog of intervenor compensation claims has ranged from 105 to 129 during that time. In addition, in March 2015, the Commission reported that 84 claims had been awaiting award decisions past the 75-day period allowed by state law, and 38 of the 84 had been awaiting decisions for over a year. We will continue to monitor the Commission's actions to ensure it begins complying with state law by issuing award decisions within 75 days of the date an intervenor submits a compensation claim.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

The Commission conducted a preliminary analysis of the cause of noncompliance and authorized hiring a consultant to make recommendations to reduce claim processing time (See 60-day and 6-month status reports). In February 2014, the Commission requested offers but received no bids, so the Commissions Office of Internal Audits (OIA) undertook the process improvement effort. Among other things, the OIA proposed to delegate authority to the Executive Director (ED) to approve claims that meet certain criteria and this matter is undergoing further legal review and may require legislative action.

The OIA also worked with the Administrative Law Judge (ALJ) Division to develop a modified process using interns to handle ministerial/clerical portions of claims while IComp staff and judges perform more complex work. The ED also authorized hours for three retired judges (annuitants) to help with claims. The modified process began in July and is expected to reduce but not eliminate pending claims. The ALJ Division also redesigned program forms and instructions to clarify guidance and help speed claim processing. The Commission will monitor these efforts to determine if a change in state law is needed.

The commission is still reviewing the the OIA proposal to delegate authority to the Executive Director to approve certain claims. In addition, the commission has not yet determined whether the modified process begun in July 2014 will reduce the time it takes to process a claim.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

The CPUC has taken the following steps to reduce the time for processing award requests:

The Intervenor Compensation Program (IComp) staff now monitors filings pending action by the CPUCs Docket Office (DO) for newly-filed award requests. The IComp staff coordinates with the DO to promptly accept or reject these filings. Due to the large number of filings pending action by the DO, award requests previously waited processing by the DO for several weeks;

An IComp staff member now coordinates with the STAR Unit (the ALJ Divisions document preparation staff) and, if necessary, prepares draft IComp proposed decisions (PDs) for internal distribution/review, filing and publication. This change reduces the time by several days or weeks IComp PDs await processing by STAR.

All Administrative Law Judges have been assigned additional claims and asked to address these requests as expeditiously as their other priorities permit.

During 2013, the CPUC issued almost twice as many award decisions than in 2012 (89 decisions in 2013 vs. 48 decisions in 2012). Although the number of award decisions issued in 2013 has significantly increased, almost as many award requests were filed during this period. However, the CPUC is making progress in reducing the number of pending requests. The number of pending award requests has been reduced from 137 in April 2012 to 103 in January 2014.

The CPUC is continuing its efforts to streamline the processing of award requests in ways that do not compromise the quality of the analysis for determining the reasonableness of IComp claims. In September 2013, the CPUC authorized the hiring of an outside consultant to review the IComp Program and related processes, and make recommendations for significantly reducing the processing time of awards while providing the appropriate level of review. The CPUC is finalizing a draft request for offers and plans to it in the near future. The CPUC will report on this effort in the next status report.

60-Day Agency Response

The ALJ Division has examined the award request review process to determine the reasons for the long delays, and prepared the document titled, "Steps and Timeframes for Processing Intervenor Compensation Requests" (Slide No. 9 of the Preliminary Study Report). The Preliminary Study Report has been submitted to aaronf@auditor.ca.gov.

The ALJ Division has also analyzed more than 1300 award requests to determine the Commission's historical performance and compliance with the 75-day deadline. A copy of the study has been submitted to aaronf@auditor.ca.gov.

There are currently approximately 94 award requests pending completion. All of these requests have been assigned (approximately three to each ALJ) with the directive to process these requests by December 31, 2013. However, work on these requests must be integrated with work on other assigned matters that also have statutory deadlines (many of which are high priority), and must be prioritized accordingly. Therefore, completing the processing of these requests by year end is uncertain.

The ALJ Division is exploring ways to further streamline the process, with the expectation that process changes will help to reduce (but not eliminate) the number of pending requests. In addition, implementing other audit recommendations will add steps (and time) to the review process. Even if the award request review process is significantly shortened, at current resource levels the backlog of pending requests (and lengthy delays) will likely continue into the foreseeable future.

On September 5, 2013, the Commission authorized the Executive Director to hire an outside consultant(s) to review the Intervenor Compensation and related processes. The consultant(s) should make concrete recommendations for improvements of the process, with an emphasis of information technology solutions, as well as recommendations on incremental resources.